HCA 586 Lecture Packet 8

health provider-population ratio

• widely used metric to determine how many health providers are appropriate for the population

• this can be used for any professionals that are viewed as important to the functioning of society

limitations of nurse-population ratio

• based on a need for services that currently exist

• static point measure

• the ratio does account for possible productivity changes, which are likely to occur due to technology, or changes in the way care is given

• it does not provide info on the importance of a surplus or shortage

• projections of shortages and surpluses using the ratio technique has been notoriously inaccurate over time

rate of return

• calculated by comparing the costs of the investment with the expected higher financial returns that result from that investment

• these relationships are typically illustrated graphically using supply and demand style charts

short term effects of a nurse shortage in a private market

• there will be an increase in the number of patients needing services

  • this will initially mean patients would find it more difficult to schedule an appointment with a health provider

• likely

  • waiting times will increase

  • the nurses bargaining position with the employer will improve, and nurses salaries, bonuses will increase

  • they will likely add staff to increase their productivity, so that the nurses can care for more patients

• when demand for nurses exceeds supply, the labor market moves to a new, higher price equilibrium

• these higher costs lead to more frequent cases of cost-related medical non-adherence

long term effects of a nurse shortage in a private market

• as nurses’ incomes rise, the demand for nursing education increases

  • students are more likely to pursue nursing degrees, and demand grows even more rapidly for specialties experiencing the highest patient demand

• a central question is whether nursing schools can expand capacity to meet the rising demand

• if nursing schools are not able to expand, students who are pursuing a nursing education will seek such an education in non-traditional areas

• as a result of the greater supply of nurses, generated by a higher rate of return on a nursing education, the following effects may be seen

  • the number of students graduating from nursing school will continue to increase

  • nursing incomes will no longer increase more rapidly than those of other professions

• the response by students, hospital administrators, and nursing schools will result in the elimination of a shortage over time, however, the change will not be immediate

short term effects of a nurse surplus in a private market

• reduced workload and lower patient volume

• greater willingness to negotiate for patient volume

• downward pressure on wages

• wages may lag behind inflation

long term effects of a nurse surplus in a private market

• as the supply of nurses continues to exceed demand, downward pressure on wages persists, and nurse salaries stabilize at lower levels

• over time, this reduces the financial attractiveness of entering the profession, leading fewer students to pursue nursing education

• hospitals and other private market employers benefit from greater staffing flexibility and lower labor costs, which may allow them to expand services or invest in other areas of care delivery

• however, the reduced rate of return on nursing education gradually slows the inflow of new nurses

• as fewer individuals enter the profession, the surplus diminishes, and the market moves toward a new long-run equilibrium, which is very close to the initial equilibrium point

hospitals early 1800s-1900

• they functioned as aplace where food, shelter, and meager medical care was supplied to the sick/poor, armies, and those with contagious disease

  • essnetially, where they went to die

• served as a social welfare function

  • financed through charitable gifts and local government donations

  • done instead of having taxes pay for services

  • NPO model was adopted in the past, America was. amajority agriculture country and many did not see the need for organized medical establishments

hospitals 1900-present

• factors that led to a shift in demand for hospitals

  • technological advancement

  • Baby Boomers

    • created huge demands for maternity and pediatric services

  • Medicare/Medicaid Act 1965

  • PPACA 2010

economic evaluation

• those who plan, provide, or pay for health services face a persistent barrage of questioning such as

  • should individuals be encouraged to request annual check ups?

  • should local health departments move scarce nursing personnel from well baby clinics, so they can carry out home vists on the home bound senior population?

  • should hospital administrators purchase new diagnostic equipment?

  • should a drug be listed on the formulary?

meaning of economic evaluation

• cost and consequences

• choice

cost and consequences

• few of us would pay a specific price for package whose contents were unknown

• conversely, few of us would accept the package, even if its contents were known and desired, until we know the specific price being asked

choice

• resource scarcity, and our inability to be all things to all people requires that choices be made

  • these choices are based on many criteria which sometimes explicit but often implicit

  • economic analysis seeks to identify and to make explicit one set of criteria which may be useful in deciding among different choices

definition of economic evaluation

• the comparative analysis of alternative courses of action, which is based in terms of the specified action’s cost and consequences

  • the basic task of any economic avaluation are to identify, measure, value, and compare the cost and conseuqneces of the alternatives being considered

the focus of economic evaluation

• can it work?

  • concerned with efficiency

• does it work?

  • concerned with effectiveness or usefulness

• is it reaching those who need it?

• resources such as people, time, facilties, equipment, and knowledge are scarce

• without systematic analysis, it’s difficult to identify the relevant alternatives

• the viewpoint assumed for the analysis is important

• without some attempted measurement, the uncertainty surrounding orders of magnitude can be critical

CMA

• cost minimization analysis

• focused on achieving the least cost alternative

• not concerned with the effectiveness of the procedures

• only addresses on dimension

CEA

• cost effectiveness analysis

• focus on the costs and effectiveness of an action

• expressed in terms of a ratio

  • the denominator is the gain in health

  • the numerator is the costs associated with the health gain

• costs are related to the effects of the action

• assumes the onset that the indefensible do-nothing alternative does not exist

• it is not possible to reduce the outcome of interest to a single effect common to both alternatives

• without a common denopminator, comparison is impossible

CBA

• cost benefit analysis

• measures both the cost and consequences of alternatives in dollars

• can be used to make an economic decision of any kind

• provides an estimate of the value of resources used by each program compared to the value of resources the program might save or create

• assigns a monetary value to the measure of effect

• the consequences of a service program will often be expressed in terms of the dollar benfit

• expresses effects into their dollar benefit

  • the monetization of an outcome is not an easy task

  • sometimes inappropriate to assign

  • ethical problems

• as a result, often not used in healthcare delivery

• implicitly assumes that each program is being compared to do nothing alternative which entails no cost and no benefits

CUA

• cost utility analysis

• enables comparison across different health programs and policies by using a common unit of measurement

  • a comparison unit is known as a quality-adjusted life year

• provides a more complete analysis of total benefits

• what do QALYs measure?

  • number of people helped

  • duration of effects

  • time preference

  • risk attitudes

  • illness severity

  • patient age

• ignores

  • personal responsibility

  • fairness